News

One Year Later, Legal Pot’s Performance Underwhelms

Thu, 01/10/2019

One year has passed since adult-use cannabis sales became legal in California. But the green rush many envisioned just hasn’t materialized.

There are only 547 retail dispensaries operating with temporary and annual licenses from the BCC today. In the first few years of legalization, state officials were anticipating around 6,000. The state is expecting $471 million in pot revenue this fiscal year, which is below the $630 million projected in Gov. Jerry Brown’s budget.

A number of factors are driving the disappointing numbers. These include ongoing licensing hurdles, high taxation, marijuana industry banking problems, and local bans. In fact, just 89 of California’s 482 cities currently allow retail sales of marijuana.

“The cannabis industry is being choked by California’s penchant for over-regulation,” California NORML Director Dale Gieringer told the Los Angeles Times. “It’s impossible to solve all of the problems without a drastic rewrite of the law, which is not in the cards for the foreseeable future.”

Unburdened by taxes and regulations, the black market for marijuana continues to thrive. That makes it even more difficult for legitimate enterprises to stay afloat. Many pot shop owners have criticized authorities for not doing enough to clamp down on illegal dispensaries.

On the cultivation side, problems also abound. The California Growers Assn. would have liked to see about 5,000 commercial grows licensed by this time. The actual number is closer to 2,160.

“We are lagging far behind,” the Assn.’s president, Hezekiah Allen, told the Times. “It’s woefully inadequate. Most of the people in California who are buying cannabis are still buying it from the unregulated market. There just isn’t a reason for most growers to make the transition.”

State legislators and regulators have been trying to improve the situation. California will soon allow marijuana deliveries statewide, despite fierce opposition from local governments and law enforcement groups. Once finalized, that should significantly increase access to legal marijuana.

But other attempts to streamline marijuana sales have fallen flat. An effort to reduce California’s pot taxes, as well as a bill that would have created a state bank for marijuana transactions, both failed in the Legislature last year.

Despite the underwhelming figures, California’s pot czar Lori Ajax says she has high hopes for the new year. Speaking to the Los Angeles Times, she said she was “optimistic” and noted that stricter enforcement of illegal businesses and faster licensing of budding enterprises are the state’s top priorities for 2019.